Australian land and online gambling giant Tabcorp announced Thursday that it is to pay GBP 39.5 million to its Sun Bets joint online venture partner News UK in order to exit the struggling enterprise.
Tabcorp’s managing director and CEO David Attenborough said in a company statement:
“The performance of Sun Bets has been below expectations and we do not expect a material improvement over the next 18 months. As such, we have reached an agreement with News UK to exit the agreement.
“While we didn’t get it right, we have taken valuable learnings from the Sun Bets start-up process and operations which will inform our approach across our portfolio.
“I would like to acknowledge the Sun Bets team for their efforts in building the business from start-up phase.
“We continue to have a strong relationship with News Corporation.”
Tabcorp expects to record a significant item of approximately A$91 million (after tax) in respect of Sun Bets in its financial statements for the year ended 30 June 2018, up from A$52 million in the 1H18 financial statements.
This amount includes the exit payment to News UK, which is partly covered by the onerous contract provision in 1H18, and asset impairments. Tabcorp is expected to incur other closure related costs in FY19, up to approximately A$10 million.
Our readers will recall that Sun Bets launched in the UK two years ago under The Sun newspaper branding, but performance failed to meet expectations, prompting Tabcorp to call for a strategic review of the venture in 2017.
News UK remains optimistic on the project, with a spokesman claiming that the Sun’s strong brand has seen the launch of other successful extensions such as Dream Team and Sun Bingo, and is confident in its ability to drive a profitable online betting and gambling business.